how does a ch 13 bk work?

[2lj0420]

I will be filing a joint bk with hubby after May 1st of this year, bk atty still needs to determine if me & hubby qualify for a ch 7 or ch 13. I'm really nervous filing a ch 13. How exactly does it work? I'm worried at the end of the month I will have nothing or be short, I have kids, ages 10 & 16. Please post your experiences so I can get some insight, thank you.

[buffetbuster]

Welcome! This board is full of members who have a lot of personal experiences with both CH7 & CH13. If it wasn't for this message board, we wouldn't have made it through our BK.

We were on the border of filing CH7 or CH13. In the end, we did qualify for CH7. I'm not speaking from personal experience on the CH13, just what I've read on here. There are both good and bad scenarios after your monthly BK payment is made. I do know the Trustee isn't out to gouge you and make your life miserable for the life of the BK. One thing you do have to consider is, how much do you have left over now after paying these creditors and credit cards that you probably will never pay off. Weigh that against KNOWING at the end of 60 months (or sooner) these accounts will be discharged.

Good luck to you and keep searching and asking questions. There is light at the end of the tunnel.

[LadyInTheRed]

Welcome to BKforum!

In a Chap 13 you present a plan of how you will pay off as much debt as you can afford to in 36 to 60 months. Within 30 days after filing your petition, you start making your plan payment to the trustee. If your income is over median for your state and family size, the plan has to be a minimum of 36 months, but can be longer (and may need to be if you have non-exempt assets, arrears on secured assets or priority debt). If your income is over median it must be for 60 months, unless you pay all approved claims before that. All of your disposible income must be committed to the plan. If the trustee thinks your plan does not commit all of your disposible income to the plan (because you understate your income or overstate expenses) he/she will object to your plan. Your attorney will then negotiate with the trustee to try come to an agreement on a plan and the plan may be modified to get the trustee to remove the objection. If there is no agreement, your attorney and the trustee will argue in front of the judge and the judge will make the final deicision (in most cases, an agreement is reached before it goes to the judge). Once your plan is confirmed, you continue to make your plan payment until the end of the 36 to 60 months. Depending on your trustee, you may have to send copies of your tax returns to the trustee every year. If there is a significant change in your income or expenses during your plan, your plan might have to be modified. The trustee distributes funds to your creditors. At the end of your plan, whatever dischargeable debts that didn't get paid in full are discharged.

That's a chap 13 in a simplified nut shell. There are details I have left out. Read as much as you can in this forum and you will discover those details. Then ask some specific questions as they come up.

A Chap 13 is nothing to be afraid of. My plan payment is less than half what I was paying in minimum credit card and second mortgage payments and includes the payment on a modest new car I bought shortly before filing. My underwater 2nd mortgage is being stripped and treated as unsecured debt.

The keys to getting through a 13 is to be willing to make changes in your spending habits necessary to live within your means and to have a good attorney who will get you into a realistic plan that you can complete. If you haven't retained your attorney yet, consult with a couple more before deciding on one. If you are told you don't qualify for a Chap 7, make sure you understand why. "You make too much money" is a simplistic answer you shouldn't accept without further explanation.

[2lj0420]

Thank you for replies. Will let you know which bk I end up filing, working on my expenses at the moment as I have to do the credit counseling on line. Of course you can expect more questions from down the line. =)

[TheBajan]

Hello and welcome!
We are in a chapter 13 for 36 months. We were under medium income for our state so we were eligible for a chapter 7 in that respect. However, we have a second mortgage that we are having stripped and that cannot be done in a second. We also have some assets that could not be protected if we filed a 7 so we went with the 13. Our plan payments are just a small fraction of our prior debt payments and we actually have a little breathing room. The best two bits of advice I can pass on is to be sure you include everything in a budget. I don't know if you are familiar with budgeting or if it's something new you are trying to learn but remember to include everything. That means the periodic expenses as well as a certain amount for unforeseeable expenses. The IRS has guidelines that your lawyer will be able to tell you more about for your area that will let you know what is considered normal for things such as food, clothing, medical, auto, etc. Often times those allowances are extremely liberal. Use those liberal allowances in your budget to help offset the areas you are tight. After you come up with a workable budget you will be able to see what a realistic plan payment looks like. The second bit of advice is to see several attorneys before selecting one and go with someone who is well experienced in BK. Preferably someone who is familiar with the trustee in your area. Make sure he/she is someone willing to really listen to you and respects your concerns and opinions. Keep us posted and best wishes!

The Bajan